May 25, 2012

The recent sophistication of software has contributed to an increase in homegrown estate planning. These mass marketers of legal services misinform people into thinking that they are saving money and that they are receiving sound legal advice. Unfortunately, that is simply not true.

Most DIY companies do a review, making sure that all answers are completed in the questionnaire that they provide to the consumers and that all spelling is correct. These minor tasks are akin to a very narrow role as a proofreader of the consumer’s data entries. This has to be limited by law, since no attorney is involved in this process. The people that work on the documents are not attorneys, and they cannot, by law, give legal advice. If the process becomes too consumer interactive, the DIY companies would be committing unauthorized practice of law.

How can this provide the end-user with the confidence that their estate-planning documents are both legally binding and appropriate to their particular situation? Probate law is strict and unforgiving. Good estate planning attorneys work diligently to keep abreast of changes in the law through memberships in such organizations as the National Academy of Elder Law Attorneys Inc. and the Estate Planning Council of Hampden County, and through extensive, continuous reading and legal research. Creating your own legal documents provides a false sense of security, and the inaccuracies are usually discovered only when it is too late to do anything about them.

Most people need the perspective that an impartial, experienced estate planning attorney provides. You are playing with fire if you engage the services of these DIY companies for the following, although not all inclusive, reasons:

Your unique issues and circumstances can be flushed out and addressed only through consultation with an attorney; and

You are not securing the experience and the knowledge of an attorney trained to handle specific circumstances of your estate.

Due to the above concerns, in 2011 the American Bar Association Trust & Estate Law Section commenced a task force to discuss steps that might be implemented to educate the public as to the risks associated with DIY estate planning. The task force believes that educating the public is an important step, as those who use DIY services may be lulled into a false sense of security if they believe their own amateur planning addresses all their needs.

May 16, 2012

Until recently, if you entered a long-term care facility and wanted to apply for MassHealth, you would have to purchase a commercially offered annuity in order to qualify for Masshealth sooner than if you expended all of your own funds first.

Of course, if you are single, the annuity would have to be based on specific charts and tables issued by the social security administration and approved by MassHealth, and the income from the annuity would also have to be spent on your long-term care. The Commonwealth would also have to be the named beneficiary on the annuity in order to reimburse the state upon your demise, up to value of services provided by MA.

If you are married, then your at home spouse (community spouse) would be able to receive income from the annuity and not have to utilize those funds for your care in an institution.

As the commercial annuity may not pay a rate of return that was commensurate with what you want to receive, and due to the fact that it may not have been obtainable in a relatively short period of time, it is no longer as attractive as used to be. Many insurance companies no longer write short-term annuities that comply with the regulations of the Medicaid authorities, and it is increasingly difficult to find highly rated companies that sell these qualifying annuities.

In the past, a private annuity was available for you to transfer assets to your children, who would then sign an agreement promising to pay the annuity amount to you for whatever period of years was appropriate in your particular case. The Medicaid authorities have basically shut down the opportunity to use private annuities, as they claim that the funds held by children may not be protected from lawsuits, divorces, etc., and therefore, the annuity was not as “commercially sound” as an annuity sold by a licensed insurance company.

However, a recent case has changed the landscape of annuities, and now private annuities may be utilized for long-term care planning. If your children are not as responsible and trustworthy as you desire, then a private annuity may be re-insured by a commercially acceptable annuity company, which would guarantee that the funds will be available regardless of whether your children pay the premiums.

Similarly, a promissory note, which is basically an obligation to pay money back, is in the same category. In this situation, you would loan money to your children, who would pay it back to you, thus converting a countable asset, which otherwise would have been spent on long-term care, to a stream of income that is paid monthly. This lower amount that is paid allows you to qualify for benefits sooner, but in the event of your death, then the balance of the funds will have to be paid back to the state up to the amount that the state paid for your care.

In this situation, it is also a viable option to obtain a commercially sold annuity, which basically covers the promissory note, so in the event that your children do not or cannot pay you back due to financial or personal issues, then the insurance company will make the payments.

In both examples above, you will qualify for Medicaid sooner rather than later and still has some funds available for your personal needs. The private annuity and promissory note are now potentially protected techniques that can allow a Medicaid applicant to attempt to preserve some assets and allow Medicaid benefits to kick in sooner.

Naturally, they are exceptions under the law, and these asset protection techniques must be properly established you will not be approved for Medicaid eligibility.

Every so often there is an article or news item that features an elder driver who has had an unfortunate accident. We hear reports of drivers who hit the wrong pedal or lost control of the car and then ended up in the front window of a store, on someone’s lawn, or hit another car. These stories often go on to report that the driver was elderly, and the reporter then infers that the accident occurred primarily due to the age of the driver.

While it is true that some individuals should not be driving and possibly could not pass a driving test, age alone is not sufficient as a reason to deny a person the right to drive.

As individuals age, their reaction time may not be quite as good as in earlier years, and their eyesight may also diminish. While these issues may not be reason enough to deny a person the right to drive, these two matters, coupled with reduced mobility, a bit of diminished mental capacity, and other physical or mental factors, may well create a situation within which an individual should not be driving.

In some states a person is required to take a driving test after they reach a certain age, and every few years thereafter, in order to verify their ability. This restriction has often been criticized as being discriminatory against an elder, but another interpretation is that driving is a right, and it must be established and renewed from time to time.

The issue of whether the right to drive should be restricted by age is one that will be debated for years, and there may be no happy medium for those who are adamant on each side of the argument. Nevertheless, the potential to cancel one’s license sometimes occurs when an individual is involved in an accident, viewed by a police officer driving “inappropriately,” or reported by a physician who has observed a physical or mental disability and recommends that the person’s license should be revoked.

Once any of these events occurs, the driver is normally deemed to be incapable of driving unless any of the aforementioned restrictions is removed and resolved and a satisfactory road test is completed by the driver. In Western Massachusetts, there is a facility that is licensed to conduct such a driving test or at least review the elder to determine whether capacity exists that allows the person to drive safely.

Although elder driving is an issue that is not often debated, it normally surfaces when an accident occurs. It may come up when an elder’s family member, neighbor, close friend or the elder himself is injured in an accident or causes one, or his family believes that he shouldn’t be driving any longer.

One of the most difficult things you may ever face is the need to tell your family member or friend that they should not be driving. This has the net effect of taking away one’s independence, as they will be no longer able to drive themselves to the grocery store, library, religious services, activities, etc, and loss of license will have a great impact on your loved one’s life. You may hear your loved one argue that he promises to only drive during the daytime and only in town. While this may be a good start, often it is not sufficient, as the issue is not where they drive, but rather, how they drive, even within their local geographic environment.

Lawyers sometimes receive phone calls from clients stating that their license was revoked, or that their family wants to take it away. While this is certainly an intra-family issue, there may also be a legal one regarding one’s inherent right to drive. On the other hand, although your elderly family member or friend may still have a valid driver’s license, should he really be on the road, and is he is a threat to the safety of himself and others?

When discussing legal documents with elderly clients, estate planning lawyers may suggest that your loved one sign a document stating that he will not contest the event of having his license taken away when someone believes that the time has come to terminate his driving rights. While no one ever wants to hear that they shouldn’t be driving, during this highly volatile time it is oftentimes helpful to have this signed statement ready so your loved one may be reminded of their willingness to be cooperative.

Another avenue is to contact the Driving Advisement Program at The Weldon Rehabilitation Hospital at Mercy Medical Center in Springfield for an evaluation of your loved one’s driving skills. If you want this assessment covered by insurance, be sure to first obtain a prescription from your loved one’s physician stating a need for “occupational therapy evaluation for functional community mobility” and including a medical diagnosis.

Once there, your loved one will be appraised regarding his vision and perception, physical status, mobility, upper and lower extremity reaction time, traffic sign/situation identification and interpretation, cognition - including problem solving, attention and memory, and any adaptive equipment he may have. Since he will have the opportunity to prove that he is or is not capable of driving safely, this may be a happy medium that can retain peace within your family.In Massachusetts, the statutes governing elder driving give law enforcement officers and physicians the right to revoke one’s license until such time as an elder can prove physically that they are no longer under a doctor’s care, and he may be required to take both a written and physical driving test. Until that time, his license may be revoked.

We have all heard stories of the family members who disconnect the battery, remove the alternator, etc., so that an elderly family member cannot drive. While this may be a temporary fix, the bigger issue will have to be dealt with eventually. Hopefully a medical professional will step in on your behalf, but if not, you must be brave enough to discuss your loved one’s ability to safely drive and the possibility that it may be time to surrender the keys.

May 09, 2012

A new scam is hitting grandparents right where they may be most vulnerable, their own grandchildren’s safety and well being. If a grandparent receives a call from a grandchild in trouble, they would normally immediately offer assistance. In this particular scam, a grandparent receives a telephone call from someone alleging to be their grandchild.

The imposter tells the grandparent that they are in trouble in a foreign country, had their wallet stolen, have been mugged, or in some way have been compromised. They request that the grandparent wire them an amount of money that is significant, but under the radar that might signal any authorities. The amount may range from $1,000 to just under $5,000, and of course, the funds must be wired from the grandparent’s bank to the imposter’s bank.

Once a wire has been completed, it cannot be reversed, and the account may be in a foreign country and likely very difficult to trace and allow U.S. authorities to have access to it, the account holder’s name, and other information that could help the grandparent recover the scammed funds.

It is possible that the grandparent has a hearing impairment or is not astute enough to pick up on a difference in the voice on the other end. But if they do, and the grandparent asks questions, the imposter often replies that they don’t have information or the time to answer questions. They state that they have no phone and are calling from a police station or from a friend’s phone so that it can’t be traced, or that their voice sounds different due to phone system or long distance.

In addition, such thieves tend to obtain enough information about the family to dupe the elder into believing that their grandchild really is in trouble. They may be aware of personal information, various family member names, pet names, etc., so that if questioned, their responses are appropriate. The imposter may also ask the grandparent to keep the information private and usually begs the grandparent not to tell the parent of the grandchild.

This is a cruel means of fraud, directly targeted against a elder’s emotions. Of course, an elder would want to help their own grandchild, especially in time of distress.

With May being elder law month, this may be a good time to remind your elderly family members of the need to not provide anyone with bank account numbers, social security numbers, or any other personal or identifying information that may allow their funds to be improperly transferred, despite the appearance of the legitimacy of the request. Before responding, the elder should call someone: a family member, an accountant, a lawyer, the Better Business Bureau, or another government agency to validate the legitimacy of the request, despite the claimed urgency of the situation.

May 03, 2012

It is common for people to want to make gifts and transfers to various charities during their lifetime. These gifts could consist of stock, cash, life insurance, etc. As people become older, they sometimes find that they don’t need as much financial wealth to live on, and they are willing to make either an outright gift or a planned gift, such as a gift annuity or a charitable trust.

When this happens, consideration must first be given to the potential need for Medicaid down the road, as Medicaid requires a look back period of up to 5-years in order to qualify. This means that any gift that was made within the last 5-years may be looked at by Medicaid with a question of whether it was made as part of a lifetime giving plan or if this was a single gift intended to spend down assets to qualify for Medicaid.

In many jurisdictions, the gifting of funds to charity may be regarded as disqualifying transfers, but if there have been significant gifts over years, the Medicaid authority should review the gift and determine that it is not intended as a spend down strategy, but rather was given as part of a deliberate lifetime giving strategy, even through incapacity.

A similar strategy is when a person has a history of giving a weekly or monthly gift to a charity. Most Medicaid offices have agreed that such gifting to charity is not construed to be a disqualifying transfer, and therefore, that person would qualify for Medicaid and not be forced to ask the charity to return the gifted assets, which could be devastating to a charity that believed the gifts were without restrictions or strings. In many cases, as long as the person making the gift is not pending placement in a long-term facility, the gift will probably not be challenged.

When in doubt, however; a request can be made of the physician attending the donor that at the time of the prior gifts to determine that the donor was competent, of sound mind, and not disabled to the extent that they may have required institutionalized care in the near future.

Often the agent serving under a power of attorney for a donor has the authority to maintain a gift giving program to family as well as charities. The donor’s intentions were well thought out, and these gifts should be respected by all governmental agencies. Certainly, they are construed to be gifts for income tax purposes, however; the IRS could challenge a gift if there was no authority within a power of attorney to allow transfers and gifts to be made.

A questionable gift may be one where a person has pledged to make it, but has not yet complied with its fulfillment. In this case, the pledge may be construed to be a contract, and the power of attorney may be acting within his or her authority to complete the payment of the pledge even if the power of attorney document itself does not allow for gifts to be made. This gift may merely be a completion of the contractual terms in fulfilling the obligation of the donor to the charity.

In such a questionable situation such as this, where a charity is aware that the principal has become incapacitated to the extent that they are unable to make their own legal and financial decisions, the charity should review the status of the gift. The charity may wish to verify that the current situation is one where either the principal has sufficient funds to pay for their own medical expenses for 5-years, or their life expectancy is short enough that there will be sufficient funds to pay for the donor’s care for the balance of their lifetime. If not, the charity may be asked to return gifts, so they should not place the funds in an irrevocable endowment fund or use them for permanent expenditures.

If this does happen though, the applicant for medical assistance through Medicaid would ask for a hardship waiver, since the gift would be difficult or impossible to be refunded. In such situations where the donor may not be 100% competent, the charity should check with the donor’s accountant and attorney before the gift has been irrevocably allocated to a specific fund.

Gift giving can be a risky venture for people who may need Medicaid coverage within a few years. No one wants to be in a position to ask recipients to return their gifts, and no one wants to be denied the medical care they need. When in doubt, it’s smart to check with a qualified estate planning attorney who can advise you of the best strategies to suit your situation.